There is a push and laws being proposed and passed to limit the fees association management companies, or the boards can charge their owners. Recently, the legislature included a limit of $100 per fine for a rules violation in a community. Previously, the governing documents dictated what the fine structure was and some of these fines exceeded hundreds of dollars for repeated violations and blatant disregard of the community rules by owners. There is also widespread discussion on limiting the fee a management company can charge to process escrow documents. There is no set fee by law to provide the documents required by Davis-Stirling to escrow when a seller transfers ownership to a buyer, but if the seller does not provide all the documents to escrow and a management company does, it can cost $800 to $1,200. In Florida, this fee was capped at $300 with a company there also able to charge another $150 as a transfer fee.
Do some communities charge excessive fines? Of course. But with a fine as a low as $100, it now may worth the fine to continue with the errant behavior. An owner might decide to keep the tree blocking the view of the neighbor but providing better privacy for that $100 fine when in the past that fine could be $1,000. For the escrow fees, many companies depend on this revenue to maintain their profit margins. If a company expects to process 200 escrows each year and realize a net profit of $120,000, that may be crucial for their economic viability. Take this profit center away from them, and they may not have any other choice but to raise the management fee for that association. They may have to raise all base management fees 10% to offset that loss.
Are there bad actors out there charging excessively for this service? Of course. I feel a reasonable fee to produce these documents in a timely fashion and to cooperate with lenders with their certification letters is $500 to $800. But if the legislature only listens to owners and real estate agents who bemoan the additional fees management companies charge to do additional “work” and decide to limit the fees companies charge for project coordination, collections and reimbursables, they may find their dues increase substantially to offset this loss of income.
No one should pay excessively for anything. But the reality is, at my company, we break even on the monthly management fee and make all our profit from ancillary income sources and providing additional services to our boards. This is an expensive business to operate. Good team members are not cheap and the cost to keep our communities in compliance with state laws as well as maintain adequate insurance given how litigious this industry requires adequate pricing and fees. Mandate a reduction in our fees and the industry has no other choice but to increase the pricing we charge.
Do some communities charge excessive fines? Of course. But with a fine as a low as $100, it now may worth the fine to continue with the errant behavior. An owner might decide to keep the tree blocking the view of the neighbor but providing better privacy for that $100 fine when in the past that fine could be $1,000. For the escrow fees, many companies depend on this revenue to maintain their profit margins. If a company expects to process 200 escrows each year and realize a net profit of $120,000, that may be crucial for their economic viability. Take this profit center away from them, and they may not have any other choice but to raise the management fee for that association. They may have to raise all base management fees 10% to offset that loss.
Are there bad actors out there charging excessively for this service? Of course. I feel a reasonable fee to produce these documents in a timely fashion and to cooperate with lenders with their certification letters is $500 to $800. But if the legislature only listens to owners and real estate agents who bemoan the additional fees management companies charge to do additional “work” and decide to limit the fees companies charge for project coordination, collections and reimbursables, they may find their dues increase substantially to offset this loss of income.
No one should pay excessively for anything. But the reality is, at my company, we break even on the monthly management fee and make all our profit from ancillary income sources and providing additional services to our boards. This is an expensive business to operate. Good team members are not cheap and the cost to keep our communities in compliance with state laws as well as maintain adequate insurance given how litigious this industry requires adequate pricing and fees. Mandate a reduction in our fees and the industry has no other choice but to increase the pricing we charge.
